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for Oracle customers who run its software on other cloud platforms.

Oracle made subtle licensing changes on Jan. 23 that effectively doubled processor license requirements -- and, in turn, list prices -- for customers that use Amazon Web Services (AWS) or Microsoft Azure. The modified Oracle cloud licensing policy shouldn't affect users with existing contracts, consultants said. But it would apply to new customers and possibly to added deployments not covered by a current contract. Some Oracle users commenting online also raised the specter of the changes taking effect if a company is audited for license compliance by the software vendor.

The key policy change is that the Oracle Processor Core Factor Table no longer applies to AWS and Azure deployments. This removes a 0.5 multiplier used to calculate the number of required processor licenses; previously, the multiplier cut the number of Intel processor cores in a system in half to determine how many licenses a customer needed.

The old Oracle cloud licensing policy officially stated that each virtual core counted as the equivalent of a physical one. The amended policy said two hyper-threaded AWS virtual CPUs (vCPUs) now count as a single processor, while the ratio is still 1:1 if the hyper-threading isn't enabled. That change theoretically would offset the loss of the 0.5 multiplier for AWS users running hyper-threaded vCPUs -- but most Oracle users have always counted two such vCPUs as a single physical core, according to consultants.

As a result, the removal of the multiplier doubles the number of licenses that AWS users typically need to buy. The situation is more straightforward for Azure users: Microsoft doesn't support hyper-threading on its cloud platform, so dropping the multiplier is the only change that applies to them.

Oracle declined to comment about the changes to the cloud licensing policy, which were first publicized in a blog post by U.K.-based Oracle consultant Tim Hall. But the company is pushing hard for customers to use its own Oracle Cloud services instead of rival platforms. Last September, Oracle CTO Larry Ellison made waves by slamming AWS and its technology during his two keynotes at the Oracle OpenWorld conference in San Francisco.

Cloud coexistence called into question

For Hans Wald, CTO of Thomas Publishing Co. in New York, and both an Oracle and AWS customer, the idea of Oracle upping its licensing fees for AWS workloads is disappointing.

"This is definitely an unsettling development, and it casts doubt on the future prospects for running Oracle workloads in AWS," Wald said. "It seems like this move from Oracle is forcing customers to choose sides, rather than being able to rely on Oracle to coexist with other technologies in an AWS environment."

Thomas Publishing uses Oracle's E-Business Suite Release 12 applications and Oracle Database in an integrated setup with other proprietary and off-the-shelf applications, all currently running on AWS.

Wald added that he had not heard from Oracle directly regarding the shift in its licensing policy. His knee-jerk reaction is to move off of Oracle completely, but he said he must respect the reality that some of those Oracle system dependencies will be hard to remove in the short-to-medium-term.

"Even so, I don't foresee a future where it would make sense to use Oracle's cloud given the interdependencies with our other, non-Oracle systems," Wald said. "So, more likely we would streamline our Oracle resource use as much as possible to conserve costs while we run them on AWS."

A lack of cloud licensing clarity

While Oracle customers who run workloads on AWS or Azure might appear out of luck, there likely is some wiggle room for those savvy enough to notice it. The document outlining the amended Oracle cloud licensing policy notes that it provides "guidelines" and "does not constitute a contract or a commitment to any specific terms." Ultimately, Oracle's prices and other contract terms are always negotiable, consultants said.

"It's a big move in that it effectively doubles the licensing requirements for some cloud implementations," said Craig Guarente, CEO of Oracle licensing consultancy Palisade Compliance. "However, if you read the policy, it clearly states that it is not part of the contract. In fact, the client's contracts with Oracle specifically exclude any noncontractual documents and forms like this."

"I think Oracle's goal here is to create confusion in the market so people have second thoughts about using non-Oracle platforms," he said. "If Oracle wanted to be clear, they would put these license restrictions in the contracts, where they belong. In the end, it's typical Oracle leaving their customers in a difficult position."

Oracle users deserve some answers to even basic questions about the cloud licensing changes, said Duncan Jones, an analyst at Forrester Research.

"The key question for customers is: How will Oracle apply this new policy to customers' existing environments?" he said. "Did a customer who was compliant last week suddenly become under-licensed? Or will there be a grace period for customers to reduce their AWS estate back down within their license limit, as now measured?"

Oracle's issue has a lot to do with total cost of ownership (TCO), Jones said, due to its continued use of what he called an obsolete "full capacity" licensing method.

Oracle runs the risk of making its software prohibitively expensive relative to its competition, Jones said.

"It wants to boost the competitiveness of its own cloud services without driving away database and middleware customers who have chosen other cloud providers," he said.

Regardless of how much the additional Oracle cloud licensing requirements cost Wald and Thomas Publishing, he isn't optimistic going forward.

"As a customer that depends on AWS and Oracle working together, it is disconcerting to see that cooperation deteriorate," he said. "This move seems like a step in the wrong direction."

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